Govt may not okay financial code to dilute RBI chief’s power

Finance minister had earlier withdrawn complex income tax returns forms

GN Bureau | July 27, 2015


#financial code   #ifc   #arun jaitley   #income tax  

After being forced to revise income-tax returns forms, finance minister Arun Jaitley may also revise the draft of Indian financial code (IFC) which proposes to dilute powers of the RBI governor in interest rate decision.

He said today said that the government will take a view on the draft IFC after receiving comments from stakeholders.

“FSLRC (financial sector legislative reforms commission) has made its recommendations, which have been made public for comments. After the comments are received, it is only then that the government will take a view,” Jaitley told reporters in Delhi.

The draft had proposed taking away Reserve Bank chief’s authority to veto the interest rate decision of the central bank’s monetary policy committee.

The revised draft of IFC also proposed that the committee would have four representatives of the government and only three from the central bank, including the ‘RBI chairperson’.

The draft talks of ‘RBI chairperson’ and not ‘RBI governor’. RBI is headed by a governor, at present.The revised draft of IFC, released by the finance ministry last week, is based on the recommendations of the FSLRC headed by Justice B N Srikrishna.

At present, the RBI governor consults a technical advisory committee, but does not necessarily go by the majority opinion while deciding on the monetary policy stance.

Last week, chief economic adviser Arvind Subramanian said “FSLRC report is a report of FSLRC. It is not the report of the government or the finance ministry. The report is not the view of the government, commenting on media reports that the government is seeking to dilute RBI governor’s powers in deciding interest rate.”

The revised draft of IFC, posted on the website of the Finance Ministry, has said RBI “must constitute a Monetary Policy Committee to determine by majority vote on the Policy Rate required to achieve the inflation target”.

The first draft, submitted in March 2013, too had talked about the committee and majority vote, but gave powers to RBI chairperson to supersede the decision of the panel.

“In exceptional and unusual circumstances, if the RBI Chairperson disagrees with a decision taken at a meeting of the Monetary Policy Committee, the RBI Chairperson will have the right to supersede such decision,” it had said.

Comments

 

Other News

‘World’s biggest festival of democracy’ begins

The much-awaited General Elections of 2024, billed as the world’s biggest festival of democracy, began on Friday with Phase 1 of polling in 102 Parliamentary Constituencies (the highest among all seven phases) in 21 States/ UTs and 92 Assembly Constituencies in the State Assembly Elections in Arunach

A sustainability warrior’s heartfelt stories of life’s fleeting moments

Fit In, Stand Out, Walk: Stories from a Pushed Away Hill By Shailini Sheth Amin Notion Press, Rs 399

What EU’s AI Act means for the world

The recent European Union (EU) policy on artificial intelligence (AI) will be a game-changer and likely to become the de-facto standard not only for the conduct of businesses but also for the way consumers think about AI tools. Governments across the globe have been grappling with the rapid rise of AI tool

Indian Railways celebrates 171 years of its pioneering journey

The Indian Railways is celebrating 171 glorious years of its existence. Going back in time, the first train in India (and Asia) ran between Mumbai and Thane on April 16, 1853. It was flagged off from Boribunder (where CSMT stands today). As the years passed, the Great Indian Peninsula Railway which ran the

Vasudhaiva Kutumbakam: How to connect businesses with people

7 Chakras of Management: Wisdom from Indic Scriptures By Ashutosh Garg Rupa Publications, 282 pages, Rs 595

ECI walks extra mile to reach out to elderly, PwD voters

In a path-breaking initiative, the Election Commission of India (ECI), for the first time in a Lok Sabha Election, has provided the facility of home voting for the elderly and Persons with Disabilities in the 2024 Lok Sabha elections. Voters above 85 years of age and Persons with Disabilities (PwDs) with 4

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook Twitter Google Plus Linkedin Subscribe Newsletter

Twitter